Bed, Bath and Beyond 2009 Annual Report Download - page 31

BED BATH & BEYOND 2009 ANNUAL REPORT
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Defined Benefit Plan
The Company has a non-contributory defined benefit pension plan for the CTS employees, hired on or before July 31, 2003, who
meet specified age and length-of-service requirements. The benefits are based on years of service and the employee’s compensa-
tion near retirement. The Company recognizes the overfunded or underfunded status of the pension plan as an asset or liability
in its statement of financial position and recognizes changes in the funded status in the year in which the changes occur. In fiscal
2008, the Company adopted a fiscal year end measurement date and recorded an immaterial adjustment to retained earnings;
prior to fiscal 2008, the Company utilized a December 31 measurement date. For the years ended February 27, 2010, February 28,
2009 and March 1, 2008, the net periodic pension cost was not material to the Company’s results of operations. The Company
has a $6.8 million and $7.2 million liability, which is included in deferred rent and other liabilities as of February 27, 2010 and
February 28, 2009, respectively. In addition, as of February 27, 2010 and February 28, 2009, the Company recognized a gain of
$0.3 million, net of taxes of $0.2 million, and a loss of $0.9 million, net of taxes of $0.5 million, respectively, within accumulated
other comprehensive income (loss).
11. COMMITMENTS AND CONTINGENCIES
The Company maintains employment agreements with its Co-Chairmen, which extend through June 2010. The agreements pro-
vide for a base salary (which may be increased by the Board of Directors), termination payments, postretirement benefits and
other terms and conditions of employment. In addition, the Company maintains employment agreements with other executives
which provide for severance pay and, in some instances, certain other supplemental retirement benefits.
The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of manage-
ment, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial
position, results of operations or liquidity.
12. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes of $338.9 million, $261.3 million and $359.9 million in fiscal 2009, 2008 and 2007, respectively.
The Company recorded an accrual for capital expenditures of $21.7 million, $21.6 million and $36.6 million as of February 27,
2010, February 28, 2009 and March 1, 2008, respectively.
13. STOCK-BASED COMPENSATION
The Company measures all employee stock-based compensation awards using a fair value method and records such expense in its
consolidated financial statements. Currently, the Company’s stock-based compensation relates to restricted stock awards and stock
options. The Company’s restricted stock awards are considered nonvested share awards.
Stock-based compensation expense for the fiscal year ended February 27, 2010, February 28, 2009 and March 1, 2008 was approxi-
mately $44.2 million ($26.9 million after tax or $0.10 per diluted share), approximately $43.7 million ($27.2 million after tax or
$0.11 per diluted share) and approximately $43.8 million ($28.4 million after tax or $0.11 per diluted share), respectively. In addi-
tion, the amount of stock-based compensation cost capitalized for each of the years ended February 27, 2010 and February 28,
2009 was approximately $1.2 million.
Incentive Compensation Plans
The Company currently grants awards under the Bed Bath & Beyond 2004 Incentive Compensation Plan (the “2004 Plan”). The
2004 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options,
restricted stock awards, stock appreciation rights and performance awards, including cash awards. Under the 2004 Plan, grants are
determined by the Compensation Committee for those awards granted to executive officers and by an appropriate committee for
all other awards granted. Awards of stock options and restricted stock generally vest in five equal annual installments beginning
one to three years from the date of grant.
Prior to fiscal 2004, the Company had adopted various stock option plans (the “Prior Plans”), all of which solely provided for the
granting of stock options. Upon adoption of the 2004 Plan, the common stock available under the Prior Plans become available
for issuance under the 2004 Plan. No further option grants may be made under the Prior Plans, although outstanding awards
under the Prior Plans will continue to be in effect.